<p>Eagle,</p>
<p>Good question. It seems to me that with a tuition increase, since the family contribution remains the same, anyone on FA is unaffected. Again the middle class full fare paying parents get squeezed.</p>
<p>Depends what you call middle income.
Is middle income the average national income?
Double the average national income?</p>
<p>"Good question. It seems to me that with a tuition increase, since the family contribution remains the same, anyone on FA is unaffected. Again the middle class full fare paying parents get squeezed."</p>
<p>Sorry. Doesn't exist. For a family with two kids, and no huge extenuating circumstances, to be paying full-fare at so-called "need-blind" (doesn't exist) instiitutions means your income is a minimum of $160k+, putting it in the top 5% of all American families. Doesn't mean it isn't hard to pay, or doesn't hurt. Just means that a family paying full freight has an income roughly three times higher than the national median, and usually higher than that.</p>
<p>Mini, I think what you say is true (and your minimum actually a little low) at the most prestigious wealthy universities. I know quite a few families earning far less than that, though, whose offspring applied to second-ranked LACs and who received no grant money.</p>
<p>I said middle class, not middle income. <a href="http://en.wikipedia.org/wiki/Middle_class%5B/url%5D">http://en.wikipedia.org/wiki/Middle_class</a><br>
Assume an income of 160,000 (your figure), take off 1/3 fed income taxes, ssi, medicare, also deduct state, city & property taxes. OK, you have a great kid who you're now paying $43K a year to go to college, another one coming along in a few years and the school is proposing a 3-5% increase. So you're saying this family is not being squeezed?</p>
<p>how much do you think a family making middle income- of $40,000 has left over after paying fed income tax, ssi, medicare, state, city and property taxes. maybe they also have two kids, and want both to attend college- they wont qualify for Pell grants- are you telling me they should feel sorry for the family making 4x as much?</p>
<p>From wikipedia
Around 1980, when asked what level of personal income would qualify as middle-class, George H. W. Bush replied: $50,000. In fact, only 5 percent of the U.S. population was making that level of income at the time.
I don't think the top 5% qualifies as the "middle"</p>
<p>Not that Wikipedia is necessarily an authoritative source, but I think the following quotes from the same article are also instructive:
[quote]
Though an average yearly income in the United States is about $30,000, incomes all the way from $20,000 up to $75,000 a year are generally considered middle class. ...</p>
<p>Most economists define "middle class" citizens as those with net worths of between $25,000 (low-middle class) to $250,000. Those with net worths between $250,000 and $500,000 typically are categorized as upper-middle-class....</p>
<p>While 95 per cent of Americans identify themselves as middle-class, using the measures of sociology the reality seems different. Some of these individuals are clearly lower or upper class.
[/quote]
</p>
<p>I personally would give a somewhat higher upper range of income/assets, given the high cost of living in urban areas... but I also would generally consider any household with a regular income of $150K+ to be "upper" class, not "middle". I think the problem is the difference between the economic realities and the social perspective - my guess is that there are a lot of very comfortable people in the $150-$200K income range who see "upper class" as being "rich" (think Donald Trump and Bill Gates), so of course they consider themselves middle class since they certainly don't have millions around to spare. What I think they miss, though, is an understanding of the difference that their very comfortable incomes make in terms of lifestyle as compared to the median-income range earners who make up the vast bulk of the true middle class.</p>
<p>Remember, many people don't qualify for aid due to home equity. I am not complaining about the good fortune and security of home ownership, only pointing out that not every high-equity family can truly afford to tap their equity. </p>
<p>For many, especially in high-cost areas where a higher % of annual income is spent on housing, a home is-- in effect-- a retirement account. If their equity is counted, then they ARE being asked to spend their retirement funds. (Remember, IRAs 401K's are NOT counted towards assets for college purposes.) Furthermore, families struggle to pay a bigger mortgage than they already have, if their income does not rise. </p>
<p>Nobody would suggest upper middle class families have it worse than poor families. Obviously, if one has assets and income one has many more choices than someone without those things. And, if you won't qualify for aid, you also have the freedom to elect ED, which many other families cannot do. </p>
<p>But it is a very rare family that does not "feel the pain" paying for college, whether they qualify for aid or not.</p>
<p>
[Quote]
But it is a very rare family that does not "feel the pain" paying for college, whether they qualify for aid or not.
[/Quote]
</p>
<p>I agree. The only point I was trying to make is that families who do not qualify for aid bear the brunt of a tuition increase after the student is already enrolled.</p>
<p>I agree with you audiophile.</p>
<p>*I am not complaining about the good fortune and security of home ownership, only pointing out that not every high-equity family can truly afford to tap their equity. *</p>
<p>ITA with this point.
Housing in our area is going through the roof
a plain 75 yr old house around the corner from us, across the street from a house that hasn't been maintained for 5o years- just went for almost $500K in just over a week.
Our house is worth ( according to assessor) 8x what we paid for it 20 years ago. We did take out a home equity loan to access for college- but guess what? Now our payments are about 1/2 our take home.
It seems that just about for everyone a rule of thumb is that it will be assumed they will be paying ( without merit aid) about 1/4 of before tax income for school expenses.</p>
<p>Now a family of 4 with an income of $60,000 will be paying $15,000 under that guideline. - leaving them with $45,000 of before tax income to budget</p>
<p>A family of 4 with an income of $160,000 won't be eligible for much financial aid, if their contribution to tuition is $40,000, however after that contribution, their before tax income would still be $120,000, still 3x the amount of the median american income.</p>
<p>I understand that it is difficult for everyone and perhaps I am taking my own families situation too personally.Its hard not to do, when you see parents with total income of about $160,000 who live in an area with modest housing costs, say they can't afford to have child care so they must have their mother live with them to provide it, and they can't pay anymore for tuition for their older children, than half of instate public tuition.
This is because they cannot concieve giving up their trips, their * palatial mansion* and their toys.</p>
<p>
[Quote]
A family of 4 with an income of $160,000 won't be eligible for much financial aid, if their contribution to tuition is $40,000, however after that contribution, their before tax income would still be $120,000, still 3x the amount of the median american income.
[/Quote]
</p>
<p>Wrong. Tuition must be paid for with after tax dollars.</p>
<p>I was obviously simplyfiying because I don't know the other tax writeoffs the family making $160,000 has,
Both families have to pay with after tax dollars, they both have the same expenses of mortgage, SStax income tax, sales tax, ins, medicare etc. But the larger pot of money to start with obviously gives the family with $160,000 many more options, not just for college, but for retirement, health care etc</p>
<p>
[Quote]
they both have the same expenses of mortgage, SStax income tax, sales tax, ins, medicare etc.
[/Quote]
</p>
<p>Not usually.</p>
<p>
[Quote]
But the larger pot of money to start with obviously gives the family with $160,000 many more options, not just for college, but for retirement, health care etc
[/Quote]
</p>
<p>No argument here, but if you keep in mind that it may take 60K of before tax dollars to pay 40K of college expenses, you can understand how a tuition increase might sting a bit.</p>
<p>*they both have the same expenses of mortgage, SStax income tax, sales tax, ins, medicare etc.</p>
<p>Not usually.*</p>
<p>So because I don't have expensive cars- I should be lucky because my car ins is less?</p>
<p>Education is one way that families can hope to get their children out of the food bank line- but increases in tuition hit them jsut as hard as families making more money
<a href="http://seattlepi.nwsource.com/specials/workingpoor/%5B/url%5D">http://seattlepi.nwsource.com/specials/workingpoor/</a></p>
<p>emeraldkity4, great links.</p>
<p>Those articles you posted are indeed a national tragedy and something does need to be done, but that's not relevant to the point I'm trying to make. </p>
<p>I'm speaking about tuition increases after the student is already enrolled. Students enrolled with FA simply aren't affected nor are the super wealthy.</p>
<p>audiophile, I understand your point... in theory. But the reality is that students receiving need based financial aid need to reapply each year, and the formulaes for the aid change. Any increases in family income, even if temporary, will reduce aid dollars. </p>
<p>Student earnings over the summer or through part time work create a Hobson's choice: the financial aid system will require the student to work and impute a certain amount of the EFC to the student earnings, whether the student is able to in fact earn the money or not. However, if the student makes substantially more than the imputed amount, the students earnings will be double taxed for financial aid: first as an "income" source, and then for any money held in savings, as an "asset". My son's college used a formula: 50% income, 35% assets. So lets say the kid is very resourceful and can earn $10,000 - in theory that increases EFC by $8000. It got really tricky when my son decided to take time away from school: in his first full year of working he earned $25K - but he had to relocate for the job and support himself. Nonetheless, he manage to save $10K. In college financial aid terms, that would mean an increase of about $15K in EFC. </p>
<p>That is one reason my son chose to withdraw from college rather than return - between the increase in tuition and growing EFC due to his own earnings, it simply was not affordable. Despite the fact he was self-supporting and living on his own, the financial aid system would still also include my income & assets in computing EFC - so his $10K in savings would not be offset by a reduction of my contribution. </p>
<p>I'd also point out that interest rates are rising fast at this point, so the current crop of subsidized borrowers is going to face the sting of many extra dollars down the line: many will be students and their parents who borrowed at 4% but have loans capped at 9% - the added costs for rising interest rates over the term of the loan may end up far exceeding the out-of-pocket that the full pay families bore with annual tuition increases. </p>
<p>The only students who do not face the problems of rising costs are students from poor, or extremely lower middle class, families: the ones who have EFC's of -0-. As noted above, these students also must avoid lucrative work, as earned student income above a minimal amount is tapped at a disproportionate rate. </p>
<p>(This is long... more to come):</p>
<p>OK, just got done with that part of the financial aid process, and here's what I'm thinking:</p>
<p>I think the phrase "need-blind" can be interpreted to mean, "blind to the reality of the needs of working-class families". The questions on the Profile form seem geared to people who live on a different planet. I've had to enter a whole lot of zeroes in fields that seem like the questions were plucked out of la-la land. </p>
<p>Start with student assets. Went online, checked daughter's current checking account balance: $110. That's because I just gave her $100. Anyway, that's it. Zilch. Kid has nothing but what she earns from odd jobs and what I give her, and she spent all summer pounding the pavement looking for a job and no one would hire her because she's under 18. Even her brother (who has a job where he can hire people) - had to say no because of her age. </p>
<p>I had to answer at least a dozen separate questions about trust accounts, UGMA accounts, 529's, assets held in the name of other siblings, etc. Doesn't exist. <em>People with incomes like mine do not set up bank accounts as tax shelters for their kids. We don't need tax shelters. We do child-rearing as a pay-as-you-go activity. If the kids are lucky, they get an allowance geared to cover their basic needs.</em></p>
<p>Problem #2: That son of mine wants to go back to college. He is age 22. Therefore, he is deemed for purposes of college admissions to be supported by me, despite the fact that he has lived and worked on his own for 2+ years, and I couldn't legally claim him as a dependent on tax forms if I wanted to. (He didn't live at home during 2004 and 2005, he wasn't in school, and I didn't give him any money). <em>People with incomes like mine do not coddle our able-bodied kids. We do mean things like kick them out of the house or make them pay rent. It's this middle class "work ethic" thing - we think that if we don't give the kid a boot in the rear and set them out on their own, they will become unemployed drug addicts. This parental-subsidy until mid-20's thing is another upper-class concept. Military understands this, offers full time employment including room & board to ousted 18-year-olds. College people don't seem to get it.</em></p>
<p>Problem #3: Work-for-hire. I am "self employed" meaning I sell my services to individuals who hire me for flat rates or hourly rates, but don't have to pay health insurance for me or give me benefits like paid vacations. I happen to have nice white-collar kind of skills, so get work on my computer instead of getting my hands dirty scrubbing someone else's toilet or digging in their garden. But the basic premise is the same: I let it be known I'm available for work and then people hire me and pay me. </p>
<p>However, according to the college financial aid system, I own a "business". More zeroes to fill out -- assets? receivables? value of business property? depreciation? inventory? <em>market value of business?!!!</em> I don't even have a separate bank account for my "business" - I just take the money I get paid and live off of it. </p>
<p>Here among the hoi polli, this work-for-hire thing is rather common. Whenever I need something done around the house, I call up some person works on their own just like me. But the CSS Profile doesn't even have a category for this: all self-employed people must somehow try to fit on the "Business/Farm Supplement."</p>
<p>Problem #4: Deadbeat Dad. I am sure that somewhere among the monied classes, there are divorced spouses who have lots of cash to spare and pay generously for child support and have kindly agreed to pay child support for each kid all the way through medical school. Unfortunately, among my social stratus, I've never met anyone lucky enough to have married one of those fellows. Down here in median-income land, there are 2 kinds of men: those who are true hard workers who stay married and happily work 2 jobs to keep their families going, but unfortunately are already married to someone else; and those for whom "responsibility" is a 4-letter word. In trying to get the numbers needed for the finaid form, I discovered that my ex is currently 7 months in arrrears. I don't mind.. maybe he'll owe me enough in back support than I will be able to count on some money flowing in for a few months after the kiddle turns 18. I mean, we split up, I kept the house and kids, he thinks I got the better end of the deal. Which brings me to Problem #5.</p>
<p>Problem #5: Home Equity. Sigh. See post by SJMom above. Amazing what you can get these days for the modest little hovels that we of the working class families tend to occupy. Too bad I need a place to live while daughter goes off to school.</p>
<p>Calmom, If I understand your post, If my parents make $35,000 a year, and I as a kid make $10,000, I am screwing up my chances at some financial aid. Is this true?</p>